How Digital Advertising and Ad Pricing Works

The world around us has become digital. More than half of the people living on Earth are connected to the internet. That's almost 4.5 billion people. The interesting thing is that this all happened in only 28 years. Yes, 1991 was the year, when the World Wide Web, today's internet, was publicly launched.

‍

Digital Around The World (Hootsuite)

‍

But the biggest internet usage increase came with the arrival of social media platforms. 80% of internet users (January 2019, Hootsuite) are also active social media users. The leading platform, with 32% market share is Facebook. Combined with ownership of Instagram and WhatsApp, it makes 66% market share. Globally. In any case, YouTube, with 27% market share can be considered the second largest platform.

‍

Popular Social Media Platforms

‍

Facebook's market capitalization was 632.43B USD as of January 16th, 2020. This number makes Facebook the 5th biggest company in the world by the market cap. Even bigger, is the Alphabet (Google). It took 3rd place with a 1000.7 USD market cap.

‍

You might ask, why are these companies so big, when their products are mostly free to use? The answer is advertising. Google and Facebook are the world's biggest advertising platforms. Companies spent around 170 billion dollars on Facebook and Google Ads in 2019 alone, and this number is still growing.

‍

Major Global Digital Ad Sellers (eMarketer)

‍

The fundamental difference between traditional and digital media is given by data that these platforms are generating. They capture every interaction of its users, so they know every user in detail. It allows targeting ads with many options, such as gender, age, location, relationship, income, home, interests, connections, generation, life events, ethnic affinity and much more.

‍

Online Behaviors

‍

You and your business can take advantage of it and use this platform to advertise your services or products to a very specific audience for a reasonable price. Usually a lower price (compared with traditional “offline” ads media) brings digital advertising closer to small businesses and freelancers.

‍

Unlike traditional media, advertisers only pay for interactions. There are many cost structures digital advertising platforms are using and these are based on marketing objectives and overall campaign goals.

‍

CPC

Cost Per Click is the most common cost model used by almost all digital advertising platforms. It charges you, as an advertiser, for every single click completed by a user. It means that your ad contains an external link that redirects users to your website. The average CPC on Facebook is 1.72USD, but it varies across industries.

‍

CPV

Cost Per View is a model built for video ads. You, as an advertiser, are charged every time a Facebook user sees your video. Keep in mind that Facebook considers a video as “viewed” after only 3 seconds.

‍

The average CPV price is relatively low, somewhere between 1c to 15c, but it varies across industries. Price per view should always be compared with other metrics, like CTR, to see if it is effective.

‍

CPM

Cost Per Mille is a pricing model, where you are charged per 1,000 impressions. An impression is when an ad is delivered to a user’s feed. If you are looking for an increase in brand awareness, this is how you will be charged.

‍

CPA

Cost Per Action (Acquisition) is similar to CPC. You are not charged per single click, but for a specific action a user completes on your website. It can be form filling, an app install, event registration or for scheduling a meeting.

‍

The average cost per acquisition on Facebook is 18.68 USD.

‍

CPL

Cost Per Like is a cost model used for gaining business page likes. It is good for building brand awareness. It is usually low cost, so this could be a cheap way to promote your business page. Keep in mind, that this is effective only when your page is active and publishing content consistently.

‍At first glance, it might look complicated and confusing. But at the end of the day, this is what you and your business needs. It is a groundbreaking feature, because you can focus on reaching your target audience and through that, you can make your campaigns more cost-effective.

‍

How is ad cost determined?

I mentioned several times that ad cost varies across industries and platforms. There is no fixed price per click/action, it is the subject of many conditions. Now, I will explain to you how it works, so you can create better and cheaper ads.

‍

Google

Google's advertising platform, Google Ads, is a keyword-based PPC platform. It shows ads in a search based on the keyword the user is searching. It means, that if a user is searching “family car”, Google will show ads related to this keyword. If you're selling family cars, your ad shows up right in front of the user’s eyes.

‍

Unfortunately, it's not that simple, because you are probably far from being the only one who is selling family cars and advertising it. Google needs to decide whose ad to show. This process is called Ad Ranking. It takes your maximum CPC bid and multiplies it with the quality score.

‍

Ad Rank = CPC bid * Quality Score

‍

CPC bid

A maximum price you are willing to pay per a single click. This setting is completely in your hands.

‍

Quality Score

Google's rating of the quality and relevance of both your keywords and PPC ads. It depends on multiple factors…

‍

Click Through Rate – if your ad has a lot of views, but only a few clicks, it is a sign that your ad might be irrelevant

Landing Page Quality – if you are advertising “family cars,” but your landing page is focused on a sports car, Google will decrease your Quality Score

Relevance of your ad text

Relevance of keywords

Historical Google Ads performance

‍

The higher the Quality Score is, the better price per click you will get.

‍

CPC = (Ad Rank of ad below you / Quality Score) + 0.01USD

‍

CPC Calculation

‍

Facebook

Facebook and Instagram ads, unlike Google's Search ads, aren't based on keywords, as these social media platforms work on slightly different principles.

‍

Factors, that influence the cost of Facebook Ads are:

Ad objective

Bidding

Audience

Ad quality

Industry

‍

Ad objective

An ad objective is a clear and specific aim of an ad. It determines who Facebook shows your ad to. This can have an extreme affect on its cost. There are 3 main objective types that are divided into specific actions.

‍

Awareness

Ads with the Awareness objective lead to increasing brand and local awareness, as well as gaining a higher reach and interest in your product or service.

‍

Consideration

If your goal is to get people thinking about your product, drive more traffic to your web or generate leads, you should focus on this category.

‍

Conversions

If your goal is to convert Facebook users to customers, then these types of objectives are for you.

Campaign Objectives

‍

Bidding

The next factor that influences ad price is the maximum amount of money you are willing to pay. It's called bidding. You set a maximum price manually (or automatically, where Facebook calculates the best price for you) and then it competes with other advertisers in an auction. Take note that a higher price doesn't guarantee that your ad shows up. Facebook considers ad quality and user experience.

‍

Audience

An audience, or target audience, is a group of people you aim your ad at. There are over 350 audience attributes to choose from, so you can be very specific.

‍

Ad quality

Facebook is a visual platform and is considered to be a personal space for its users, where they are looking for creative and interesting content. So your ads should be, of course, creative and interesting. They should also be visually appealing, able to evoke emotions and they should match users' interests. This is what Facebook considers when scoring your ad.

‍

Industry

As I mentioned at the beginning of this article, ad pricing varies across industries. Here is a table that you can use as a benchmark and with which you can compare your results.

‍

The Cost of a Click

‍

How can you lower your Facebook price?

Optimizing an ad price isn't an easy process. There are thousands and thousands of combinations and it can take years to find the right formula. You basically have 3 options to optimize your costs.

‍

Become an online advertising specialist

That's perfect advice, right? I know, this is probably not the best way to go for most people, because it takes a lot of time and energy to become a specialist. Being a social media specialist is a regular full time job, so if you are not ready to quit your current job, then this is probably not the way you want to go.

‍

Hire someone, who is already an advertising specialist

Hiring a freelance specialist or agency can be a way to effectively advertise. This option is usually more expensive, especially if you are a one-man-show and your marketing budget is tight.

‍

Use marketing automation tools that make it easy for you!

There are dozens of marketing automation tools on the market. These tools simplify the whole campaign creation process for people, who have no time to learn everything necessary and don't have a sufficient budget. That's why we created app. It helps small businesses run their campaigns without extra knowledge needed. Try it here, it's free!

Why Should Every Realtor Use Instagram?

Are you using Instagram to attract qualified real estate leads? Or are you merely relying on Facebook?

Things changed in the last years and social media platforms as well. Instagram is one of the platforms that has grown dramatically in the last decade. In the beginning of 2012 it started with “just” 15 million users. After 8 years the user base grew to over 1 billion in 2020. Not just these numbers is a reason to consider using Instagram in your business.

37% of American adults use Instagram

Direct communication

Instagram is based on connecting people. It is therefore, very easy to communicate directly with your followers or even potential customers, whether publicly in comments or in private messages. In addition, the Instagram application is very well optimised, so it is comfortable and easy for the person on the other side of your communication.

‍

It's visual

Instagram is based on visual content. People like it and spend a lot of their time looking at a variety of photos, pictures and videos. Embrace it when you have something to show. Photos of houses are very popular on Instagram and this is a huge opportunity for you! Show the properties you are currently offering.

You don't have to compete with Zillow

When you offer your services on Zillow, Realtor, or Trulia, you compete with almost all real estate agents. On the other hand, according to FitSmallBusiness.com, only 14% of agents are on Instagram. It gives you a big advantage. Up to 83% of buyers want to see pictures of properties online.

‍

Precise Ads targeting

Instagram is a part of Facebook. It brings great advantages. Via Facebook Business Manager, you can publish ads on Instagram with very precise targeting. This allows you to reach potential customers using a number of parameters, such as where they live or even whether they are considering buying property. If you are not sure about the Business Manager, try our groost app, that simplifies the whole process to just 7 steps.

‍

Reach right audience with hashtags

Essentially, hashtags are an SEO on Instagram. It is a tag in the description of your post and it allows users who are not following you, to find your content and, hopefully, follow you. Basically, you have two types of hashtags, global and local. Local hashtags are best if you are running a business account or have a physical location and want to promote locally.

‍

Publishing content is easy and quick

From the very beginning, Instagram was designed to publish visual content. With the official mobile app, it's very easy and fast. You have a variety of tools to edit your photos and videos on the go.

‍

Live streaming

Live streams are becoming more and more popular. It turns out, according to this study, that up to 82% percent of people prefer live videos compared to social media posts. And 80% of users would rather watch live videos from a brand than read a blog. Because it is honest and authentic. Take this opportunity to present the property you are currently selling.

‍

Insights into a business profile

On Instagram, you have basically 2 types of profiles. Personal and Business. The business one offers you more features that are essential for your business. One of the features is called Insights. You can see several charts and numbers here and use this to analyse your audience to find out what is and isn't working.

6 TOP Marketing Metrics Every Brand Needs to Track

There are hundreds of metrics you can measure today. That's the biggest advantage, as well as, disadvantage of digital marketing.

‍

‍

The truth is you can measure almost anything. You can build a detailed report with real time data, refresh and make those business decisions based on precise data, visualize insights in all those bar charts, funnels, pie charts, cohorts, heat maps, numbers, percentages, etc. That's what the theory is about.

‍

And I partially agree with that, but the reality may be a bit different. Yes, this is important for large companies that, thanks to comprehensive measurements and reports, can optimize their processes and save a significant amount of money.

‍

However, at the SMB level, the situation is quite different. You probably don't have an IT department full of specialists and data analysts who are able to invest hundreds of hours to set up your data platform, connect dozens of data sources, transform the given data and from that, build strong reports. Also, you probably don't deal with a billion dollars in revenue, so sophisticated analytics can be counterproductive because you don't have enough quality and precise data to optimize individual processes and earn a significant savings.

‍

I'm not trying to say that you should completely ignore data analytics. Rather, it is about finding the right balance between not getting overwhelmed with data and gaining valuable insights that can help your business.

‍

In this article, I’ll cover the most important metrics that actually give you valuable insights into your business and online marketing efforts. At the same time, I will highlight the metrics that are less effective and easy to misinterpret.

‍

What Are Those 'Marketing Metrics'?

Klipfolio, an analytics tool, says: Marketing Metrics are measurable values used by marketing teams to demonstrate the effectiveness of campaigns across all marketing channels.

‍

Sounds a bit complicated, but in other words, marketing metrics are numbers that tell you how effective your marketing efforts are. You set a goal, and your metrics tell you, whether you have achieved it or not. Based on this you can make a change and try a different approach.

‍

Example: My goal is to get 100 website visits per 50 USD invested in Facebook ads. My metric in this case is Clicks. Two scenarios could take place:

I get 100 clicks and it cost 50 USD. Great! I have achieved my goal.

I get 15 clicks and it cost 50 USD. It is clear that I have not achieved my goal and I need to fix it. The solution could be to change a description or image.

‍

Why are Social Media Metrics So Important?

Metrics can tell you, how effective your efforts are and help you to make changes before you spend hundreds of dollars.

‍

Digital marketing is unpredictable, and a strategy that worked well the last couple of months could eventually become less effective or stop working entirely. Metrics tell you immediately if your efforts are paying off.

‍

Common Mistakes

Setting the wrong goals and misinterpreting engagement metrics is pretty rife. Let's check out some common scenarios. Maybe you will even spot some of your own mistakes.

‍

Treating All Social Media Platforms the Same

You probably wouldn't speak English in Portugal. The same principle applies when it comes to social media. Every platform works in a slightly different way, has a different user base, and people behave differently. Your message shouldn't be the same for all platforms. We wrote an article about demographics and the specifics of individual social media networks, so make sure you read it to understand how all those platforms work and what makes each one different.

‍

Tip: You don't have to be a marketing PRO to master campaigns across multiple channels. Try tools like groost that simplify this process.

Focusing on Likes

I'm not saying that likes are not important. But in and of itself, they mean nothing. Nowadays, it is possible to buy likes for posts or a page for a few dollars, but it doesn't help your business at all. It usually does the opposite. It is necessary to look at the number of likes in context of the given situation.

‍

Measuring Everything

You can measure almost anything you can think of and probably much more. I understand the allure of this idea, because in the beginning it sounds amazing…the theory about having precise real time data on a beautiful dashboard... but reality is usually different. In most cases, you can end up with an over-complex dashboard where you could easily get lost. It takes a great deal of time and energy to make this work.‍

‍

Ignoring Analytics Completely

The extreme opposite of measuring everything is measuring nothing. With the vast amount of information around us, it's understandable that one would just want to ignore everything. But with this approach, you are probably losing your money and throwing its potential out of the window. You can't tell if your spending on social media advertising is effective or if you are losing money, if you're not analyzing what is working vs. what is not. You don't need a complex dashboard with many metrics to keep proper tabs on this.

‍

Metrics to Focus On

You know it already, there are hundreds of metrics out there. But you should focus on those that are most important for you and your business. From our perspective, these are the ones which you should be keeping track of:

Reach

Reach tells you, how many people were able to see your content. It doesn't mean real views, rather it refers to potential views. If someone with 1,000 followers retweets your tweet, your reach increases by those 1,000 different people, but not every single one of those people may see it.

‍

A higher reach is better, but if you don't get enough leads or engagement, something could be wrong.

‍

Leads

This metric tells you, how many direct contacts you got. A lead is a person or even a company that is ready for a follow-up. This person has usually reached a stage where they are ready to become your customer.

‍

Engagement

Engagement measures the amount of likes, shares and comments your content or ad received. This metric tells you, how much your content is resonating with your followers. It's an important metric to check when optimizing your content strategy.

‍

The engagement rate is influenced by many factors like platform, number of followers, industry, time of posting, etc.

‍

Tip: See our article on What to Expect from Social Media.

‍

Conversions

This metric is an exact number of how many people targeted, eventually became paying customers. Remember, that this isn't just about this exact number. It has to be compared with the Conversion Rate, which is a percentage metric that shows you a ratio between visitors and converted customers.

‍

Conversion rate may vary across industries and required action.

‍

Tip: See our article on What to Expect from Social Media.

‍

Revenue

This is a monetary metric telling you, how much revenue your ad has generated. At the end of the day, this is what counts.

‍

Return on Investment (ROI)

ROI demonstrates how your marketing time, energy and money spent are contributing to your company growth. You always have to know how much money you spent on advertising and how much money it has brought. It tells you, if and how effective your advertising efforts are.

‍

ROI (%) = (income/spend)*100

‍

Your ROI should always be higher than 100%, otherwise a given strategy was ultimately, a waste of money.

‍

Where to Start with Your Social Media Metrics

Well, now you should understand the basics of Social Media Metrics. But the most important thing to understand is how to implement metrics in real-life scenarios. These are 4 steps to successfully start your measurements.

‍

Step 1: Define Your Goals

In the beginning, find some time to write down your goals. All social media platforms could be used in many ways. What do you want to accomplish? The more specific you can be, the better.

‍

Here is a list of examples to help you brainstorm:

Bring more people to my website

Increase views of my social media content

Other goals…?

‍

Tip: We made an article about defining goals, where you can read all about the process behind it.

‍

Step 2: Create a Set of Metrics

The next step is to understand which metrics to use, to see if you are achieving your goals or not. This process is quite easy. Basically you are trying to find those numbers, so you can recognize how effective your efforts are. Your goal should fit into the following categories:

‍

Awareness – Use metrics like volume, reach, exposure, and amplification. How far is your message spreading?

‍

Engagement – Look for metrics around retweets, comments, replies, and participants. How many people are participating, how often are they participating, and in what forms are they participating?

‍

Traffic – Track URL shares, clicks and conversions. Are people moving through social media to your external site and what do they do once they’re on your site?

‍

Advocates and fans – Track contributors and influencers. Who is participating and what kind of impact do they have?

‍

Share of voice – Track your volume relative to your closest competitors. How much of the overall conversation around your industry or product category is about your brand?

‍

Step 3: Measure

Social media platforms usually do provide some basic analytics. For most cases it's enough, so if you're new to analytics, start small. In our case, we built groost. analytics right inside the app.

Keep in mind that social media interactions happen in real time. Look for a tool that allows you to access data immediately, without delay. You can't afford to wait weeks or even days for a report. Having real time data allows you to react and make quick changes, in order to stay effective.

‍

Step 4: Monitor and Make Changes/Decisions

To make all previous steps valuable, take a data-based action. Don't forget to see data in a wider context and compare it with industry benchmarks.

‍

Ask yourself…

Did I achieve what I was expecting?

How are these metrics doing?

Am I missing something?

‍

These questions will help you optimize your social media analytics process.

How Do Sponsored Social Media Posts Help You Reach WAY MORE People?

Have you already come across social media posts tagged with “Sponsored”? Do you wonder what they mean and on which principle they work? Good question! An even better one would be, how can these posts help you reach way more people than you do with your organic posts – the ones that you publish on your social media timeline? In today's post, we will uncover not just that, but also concrete steps to get started!

‍

Truth be told, you can use these types of posts to reach many more people than you do today…

‍

But before we jump into what a sponsored post means, let's look at what it doesn't. Say that you run an Instagram profile and add posts to your profile. So do we. This is what it looks like:

‍

Instagram Feed

‍

These posts are the ones that appear on your social media profile and most importantly, on the feed of your followers and friends. The ratio between the number of people you reached with your posts and the total number of followers is your ORGANIC REACH. The more people who follow your profile, the more people you can reach with every one of your social media posts. Therefore, it is important to build your audience.

‍

But what if you want to reach more people? What if you want to expand your reach to someone who hasn't liked your page yet? Both answers will be clarified, go ahead and continue reading...

In regards to the organic reach, we have to tell you the cruel truth. The organic reach is constantly decreasing. What that means for you, is that you no longer reach the same number of people as you did before.

We have covered this topic more thoroughly in this article, but to point out the importance of this decrease, see the graph below:

‍

Facebook Organic Reach Decline

‍

From 2012 to 2016, the organic reach on Facebook has sunk to almost zero…

Let's do some math to understand it perfectly. Say your page or profile has 10,000 followers. Due to the organic reach decline, your organic posts may reach between 300 and 800 people based on its performance – making your organic reach between 3% to 8%. Now the chance that some of these 300 to 800 people interact with your content is way lower than if you reached 3,000 to 8,000 people (call me captain obvious). It may sound logical and totally clear, but ignoring this fact and relying solely on your organic reach may cost you your share of voice or market share. In other words, you may lose your followers, fans and customers if you don't act.

Now that we've come through what organic posts mean, let's finally clarify what these “sponsored” posts are that serve you targeted content on your social media feed…

Refresh your Facebook or Instagram feed and scroll for a few seconds… Stop, there it is! A post that looks like any other one with one small difference. It is tagged with “Sponsored” in the upper part. Can you see it?

‍

Vogue Business on Instagram

‍

You will find plenty of these on your feed. And most of them will be perfectly targeted at you – based on your interests and preferences. Now the key is to leverage this feature for you and your business, isn't it?

Let's dive into how this sponsored content works. Facebook, Instagram, LinkedIn, Twitter, Tik Tok and other social media platforms allow you to run ads through their advertising interfaces. You sign up, learn how the platforms work and jump straight into promoting your content. These interfaces – let's call them the Campaign Manager Accounts for now – remain unknown to “ordinary” users. It's all the magic that “happens in the background”.

Let's take Facebook as an example. Say I want to promote our post that has been (organically) published on our timeline:

Facebook Feed

‍

Organically we didn't reach as many people as we'd like to. Let's promote the post then…

Either in Facebook Business Manager or tools like our own app, you can follow a few steps and create your campaign – sponsor a post. By defining your goal, marketing persona, budget and message, you can expand your reach and speak to people that have never heard of your business before or show your content to followers you'd not have been able to reach organically.

Going back to our example, let's say that we want to target small business owners in California. According to data from Facebook, we could reach 290,000 people, respectively 277 to 800 people a day for less than $10 a day.

Yes, promoted posts are about investing something into expanding your reach. But as you see, you don't have to sit on millions of dollars in marketing budget to speak to more potential customers than you probably do today. You don't even have to sit on hundreds of dollars to achieve your goal of reaching more people…

Not to say that when they purchase from you, your investment is back – with interests (or margin:)

This is what the set up would look like...

Facebook Ads Manager

‍

With only a few clicks – in case you use tools that simplify this process – you are able to start your campaign (sponsored post).

The best thing is, that you target your posts solely at people who are relevant to your business. In other words, you tailor your content to people that can become your customers, followers or fans.

Say you run an eshop with accessories. You sell watches, necklaces, small pieces of clothes, rings and other goods. You have two types of products: those made for men and those made for women.

You manage your Instagram profile and post content about your customers’ satisfaction (reviews), newest pieces of clothes and inspiration as to how they fit with other outfits. This content can be interesting for both men and women. But what if you want to run a campaign targeted solely at men with the goal of selling all the men's watches that have been sitting in stock for a long time? That's when the sponsored post comes into play…

The process has already been described: you define your goal (sell more watches), marketing persona (men in California between 25 and 45 years old, interested in fashion), choose which channel you want this post to appear on (Instagram), set your budget and campaign length ($5 a day for 7 days) and finally, create your great content – the ad that your potential customer sees on his feed. Say your post looks something like this:

‍

Example of an Instagram Post

‍

Thanks to this campaign (while using the setting in the brackets), you are able to reach more than 7,000 people. And you've invested $35 in total. Awesome, isn't it?

Is this the only option to increase your organic reach, you may ask? It's definitely not. Marketing is all about synergy. You may want to combine more tactics to achieve the best results.

Let's go through some tips & tricks that can work perfectly with (or without) promoting your posts.

‍

Create engaging content that can't be ignored

Again, this may sound obvious, but is not always completely understood. Creating super engaging content comes first, along with understanding your audience! If you don't know who you're talking to, your speech can never really resonate, right?

It's like in life. Imagine you go on a date with a pretty and intelligent woman who is into fashion and yoga. You spend the whole time speaking about the Super Bowl! How would that date end? You probably know the answer...

The same applies to your social media profiles and any content that you publish. If you create something that no one's interested in, you decrease not just your reach, but also engagement.

If you do so, your followers will like, comment, share and recommend your content and products. Thus, you can leverage the real power of social media: the snowball effect that happens once people share your content.

‍

Leverage other channels and platforms

Let me share one secret with you. Your followers are not only on Facebook or Instagram. They also use other platforms like Youtube, Pinterest, LInkedIn or Tik Tok. In fact, an average American Internet user has more than 7 social media accounts. That being said, you should definitely leverage the potential to reach your audience where they are (and where your competitors probably aren't… yet).

Platforms like LinkedIn or Tik Tok have a much higher organic reach now. They are where Facebook was a few years ago. That may change as they grow and decide to monetize their audience, but till then, you can build your follower base and successfully grow your business! Go for it...

Are you also suffering from a continuous decrease in organic reach? Do you reach less people than you'd like to? Try some of these tactics and let us know how it has helped :)